UK CPI seen falling to 1.5% in August - RBS

FXStreet (Łódź) - Ross Walker, Senior UK Economist at RBS expects UK CPI, due out on Tuesday, to slide to 1.5% in August from 1.6% seen in July, as a consequence of declining energy price inflation and a modest drag from food.

Key quotes

"Petrol prices are forecast to fall by 1.0% m/m in August, lowering the y/y rate to -5.3% from -2.9% (subtracting 0.08pp from CPI inflation)."

"Utility prices are forecast to be flat in the month, in line with the recent trend, and leaving they/y rate unchanged at 4.7%."

"Food & non-alcoholic beverage inflation in August is forecast to be marginally lower at -0.6% y/y from -0.4%, mirroring recent PPI data trends."

"Core CPI is forecast to remain at 1.8% in August – the bulk of the summer sales have passed & a normalisation in airfares is expected."

"RPI inflation is forecast to fall to 2.4% in August from 2.5% in July; RPIX to 2.5% from 2.6%."

"A 1.5% CPI inflation outturn in August would amount to a further undershoot of the MPC’s August
Inflation Report forecast of 1.81% in Q3 2014 (i.e., our forecast would leave CPI around 25bp below), which would, prima facie, make any further dissenting MPC votes in the context of the November Report less likely."